FII deluge ?

Foreign institutional investors are expected to raise a toast to the Indian equity market in the coming week as they see the political stability and continuity in policies to give a fillip to the domestic economy.

“One can expect a deluge of FII inflow next week. Investors in the Far East and the UK have been keenly following the Indian elections. With this win, money will come in from all across the globe,” said Mr Saurabh Mukherjea, Head of Indian Equities, Noble Group.

Global Investment bank Goldman Sachs said the election results may help India “decouple” further from the global economy by giving a fillip to domestic demand. “There are now upside risks to our GDP growth forecast of 5.8 per cent for FY10.”

Market players agree that India will be back on the FII radar in a big way as an attractive investment destination as the new Government is expected to press ahead with the much delayed economic and financial reforms agenda.

“Long-only FIIs, who have been waiting on the sidelines for the event risk to pass, would also come in. Global emerging market funds are 2.5 per cent in cash and Asia dedicated funds are 3.5 per cent in cash which needs to be deployed,” said Mr Amitabh Chakarborty, President-Equity, Religare Capital Markets.

“Liquidity in global markets is reasonably strong, local mutual funds have been in cash for some time and internationally, the risk appetite has increased significantly. The volatility index, commonly seen as the ‘fear index’ doesn’t look quite as fearful as it used to. Further, India continues to enjoy a competitive advantage among emerging economies,” said ICICI Securities Managing Director and CEO Madhabi Puri Buch.

As the newly elected Government has won the mandate for “good Governance”, one can expect five years of stability in the economy and the capital markets, said Mr Motilal Oswal, Chairman and Managing Director of Motilal Oswal Securities.

“With this win, India has become an even more attractive investment destination. So one can expect a lot of FII money to come in.”

Since the beginning of the new financial year, FIIs have been net buyers of equities. “FIIs will view the election outcome positively. They will draw comfort from the fact that there will be no roll back or changes in the present policies and framework. So we could see a lot more inflows from them.” said Mr C.J. George, Managing Director at Geojit BNP Paribas Financial Services.

“FDI/FII investment prospects for India are very bright considering the inherent advantages that the country has and its huge potential to absorb capital for its development and growth. As far as investing through P-Notes route is concerned, further liberalisation cannot be ruled out,” said Mr Dinesh Thakkar, Chairman and Managing Director at Angel Broking.

via BL